Petroleum Intelligence Weekly articles from July 2008

Petroleum Intelligence Weekly archives from July 2008

SEC review gives Big Oil what it wants.
July 7, 2008... The new guidelines for reporting oil and gas reserves formally proposed by the US Securities and Exchange Commission (SEC) have been met with general approval by the industry. Big Oil wanted certain key changes and, by and large, Big Oil got...

Still work to do on IOC-NOC relations.
July 7, 2008... There are frequently tensions between international oil companies (IOC) and their national oil company (NOC) and host government partners--just ask oil investors in Russia and Venezuela--and at last week's World Petroleum Congress in Madrid,...

Sparks fly over latest Kashagan delay.
July 7, 2008... The problems continue for Kazakhstan's giant Kashagan development. Just six months after the Eni-led consortium in charge of the project signed a memorandum of understanding (MOU) with Astana pledging to produce first oil by the end of 2011,...

Growing Angola takes over Nigeria's mantle.
July 7, 2008... Any day now, Exxon Mobil will announce the start-up of two new deepwater fields that will propel Angola's oil production past 2 million barrels per day. As Nigerian output sputters, Angola has taken over as Africa's top oil producer. The...

Dollar leads oil prices in a merry dance.
July 7, 2008... Over the past 12 months, fluctuations in the value of the US dollar have correlated--not always, but frequently--with movements in the oil price. This trend has confounded analysts accustomed to understanding the value of oil in terms of supply...

North African gas growth in question.
July 7, 2008... For gas consumers in Europe, North Africa's relative proximity has proved reassuring. Algeria has been a reliable gas supplier for decades, while Libya and Egypt have added new bursts of pipeline gas and LNG, respectively, from around 2005. But...

Market shrugs off June supply surplus.
July 7, 2008... With some signs of life on the supply side and some wear and tear evident on demand, preliminary estimates for the global supply-demand balance in June point to a supply surplus of around 1.7 million barrels per day, according to PIW sister...

IEA.(GENERAL)(International Energy Agency)(Brief article)
July 7, 2008... IEA -- The world's effective spare oil production capacity is expected to improve in 2009, but then tighten again in the early part of the next decade and could drop as low as 1 million b/d in 2013-well below today's 2.5 million b/d, the...

Industry Restructuring.(GENERAL)(Brief article)
July 7, 2008... INDUSTRY RESTRUCTURING -- Mideast investment fund Dubai World and its Russian partner, Roskommuenergo, have agreed to pay $5.34 billion for Russian power generator OGK-1, the crown jewel of the country's power sector and the last asset to be...

LNG.(GENERAL)
July 7, 2008... LNG -- Caracas and Brasilia have signed a memorandum of understanding that opens the door for Brazil to start importing LNG as and when Venezuela actually commences exports. The agreement sets guidelines for negotiations between state firms...

China.(COUNTRIES)
July 7, 2008... CHINA -- State refiners China National Petroleum Corp. (CNPC) and Sinopec are to boost output of oil products after the government raised domestic fuel prices two weeks ago (PIW Jun.30,p2). CNPC will increase runs in the third quarter by 3%, or...

India.(COUNTRIES)
July 7, 2008... INDIA -- The country's largest-ever licensing round has drawn a modest response from the international oil industry after the government withdrew tax breaks on potential gas discoveries (PIW May26,p3). In total, 96 firms made 181 bids on 45 of...

Iraq.(COUNTRIES)(Statistical table)(Brief article)
July 7, 2008... IRAQ -- Oil exports dropped to an estimated 1.7 million b/d in June, down 300,000 b/d from May, as bad weather in the south interrupted sales through the Basrah Oil Terminal and higher domestic refining runs in the north prevented more exports...

Iraq.(COUNTRIES)
July 7, 2008... IRAQ -- Chevron, El Paso and Vitol are among scores of defendants listed in a new civil suit filed by the government in Baghdad that seeks to recoup billions of dollars in kickbacks paid to the regime of Saddam Hussein under the UN's...

Japan.(COUNTRIES)(Statistical table)(Brief article)
July 7, 2008... JAPAN -- Crude imports rose 16% year-on-year to 4.12 million b/d in May, according to the latest government statistics, with volumes from top supplier Saudi Arabia up 21% at 1.23 million b/d and supplies from Iran up 46% at 473,000 b/d. Iraqi...

Qatar.(COUNTRIES)(Royal Dutch-Shell PLC)(Brief article)
July 7, 2008... QATAR -- The Royal Dutch Shell-led Pearl gas-to-liquids project is nearing 50% overall completion and is on schedule to start production in 2010 and be in full operation by 2012, according to the project's managing director, Andy Brown. "We are...

Russia.(COUNTRIES)
July 7, 2008... RUSSIA -- Gazprom plans to produce 3.5 Bcm-4 Bcm/yr of gas from the Sakhalin-3 Kirinskoye field on the country's Pacific shelf starting in 2013, but the gas is unlikely to be used to provide feedgas for the state firm's nearby Sakhalin-2 LNG...

Russia.(COUNTRIES)(TNK-BP)(Brief article)
July 7, 2008... RUSSIA -- Eight senior international managers with Russian-UK joint venture TNK-BP, including Chief Executive Robert Dudley, have received new work permits, damping concerns that the company's expatriate staff would be forced to leave the...

Ukraine.(COUNTRIES)
July 7, 2008... UKRAINE -- Moscow has agreed in principle to Kiev's requests that the price the republic pays for Russian gas be raised to "European levels" gradually over the next three or four years, rather than with an abrupt increase in 2009. The agreement...

United States.(COUNTRIES)
July 7, 2008... UNITED STATES -- US independents Chesapeake Energy and Plains Exploration & Production have announced a joint-venture agreement that looks set to kick-start development of the emerging Haynesville Shale gas play in North Louisiana and East...

Yemen.(COUNTRIES)
July 7, 2008... YEMEN -- Sanaa's efforts to encourage more investment in the country's gas sector have paid off, with France's Total signing a memorandum of understanding for gas exploration in the country's southeast Hadramout region. The French major will...

Iraq opens door to international oil firms.
July 7, 2008... Iraq has opened the way for major international investment in its massive oil reserves for the first time in decades, offering six oil fields and two gas fields in its first licensing round since the US-led invasion in 2003. Included in...

Exuberant demand.(Marketview)
July 7, 2008... NEW YORK -- The oil price had little trouble holding above $140/bbl in the first half of last week and even flirted with $146/bbl on Thursday. Support for new price records came from a weakening US dollar and the expectation of a tight market a...

PIW market indicators.(Statistical table)
July 7, 2008... PIW Market Indicators ($/barrel) Jun. 30- Jun. 23- Jun. 2- Spot Crude Jul. 2 Jun. 27 Jun. 6 Opec Basket $136.90 $131.60 $121.45 UK Brent...

$4 gasoline ends US love affair with SUVs.
July 14, 2008... The idea that US gasoline demand may have peaked last year is gaining credibility as American consumers change their habits in response to record retail prices of more than $4 per gallon. Sales of gas-guzzling SUVs and pickup trucks have...

Gazprom outlines Asian export ambitions.
July 14, 2008... Russia's state Gazprom has finally begun outlining its development plans for East Asia and the Russian Far East, presenting a vision of the company in 2020 that is far more balanced between Asia and Europe, as the latter is currently the sole...

Iran cuts storage volumes, raises exports.
July 14, 2008... Iran's crude exports, which had been running at more than 2.5 million barrels per day during the first quarter, have dipped by some 10% in recent months due to a combination of refinery maintenance and the storage of more than 30 million...

Shell eyes new route into Chinese refining.
July 14, 2008... The current losses endured by China's refiners have not dissuaded some foreign investors from trying to establish a foothold in the sector, as Royal Dutch Shell and Qatar Petroleum (QP) demonstrated last month when they signed a letter of...

Saudis take early look at EOR potential.(Enhanced Oil Recovery)(Saudi Arabian Oil Co.)
July 14, 2008... Saudi Arabia doesn't need enhanced oil recovery (EOR) yet, but that doesn't mean the world's largest oil exporter isn't already testing the technology. Saudi Aramco is investigating the merits of carbon dioxide ([CO.sub.2]) injection and...

South America acquires taste for LNG.
July 14, 2008... South America is developing a taste for LNG. Argentina became the region's first LNG importer in May, and Brazil is set to follow suit later this month. Global LNG players Royal Dutch Shell, BG and Repsol YPF have taken the lead in this rapidly...

Technology, high prices revive old fields.
July 14, 2008... High oil prices and advances in technology are creating new opportunities in old non-Opec regions, with operators reassessing the economics of abandoned fields and in several cases deciding to bring them back into production. So far, the trend...

Environment.(GENERAL)(Brief article)
July 14, 2008... ENVIRONMENT -- The European Parliament has made the first legislative move away from the European Union's controversial biofuels mandate, with the parliament's environment committee voting to amend the existing target from 5.75% of road...

Formula prices.(GENERAL)
July 14, 2008... FORMULA PRICES -- Saudi Arabia says high oil prices are "unjustified" and "undesired," but the kingdom is not willing to discount its crude in order to bring prices down. Riyadh had said that it would produce more crude if it was needed, but...

Industry restructuring.(GENERAL)
July 14, 2008... INDUSTRY RESTRUCTURING -- Abu Dhabi National Energy Co. (Taqa) has wrapped up a deal to buy stakes in six North Sea fields--Tern, Eider, Cormorant North, South Cormorant, Kestrel and Pelican--plus related subsea satellite fields from Royal...

Australia.(COUNTRIES)
July 14, 2008... AUSTRALIA -- Exxon Mobil has warned it may shut its 130,000 b/d Altona refinery if the government goes ahead with a greenhouse gas emission trading scheme. The plant in Victoria, South Australia, would no longer be viable if the trading scheme...

China.(COUNTRIES)
July 14, 2008... CHINA -- Capitalizing on the global boom in exploration, China Oilfield Services Ltd. (COSL), a 55% owned subsidiary of state giant China National Offshore Oil Corp., has launched a $2.5 billion recommended cash offer for Norwegian oil-field...

Ghana.(COUNTRIES)
July 14, 2008... GHANA -- UK independent Tullow Oil is stepping up drilling on the offshore Jubilee field and expects to sanction first-phase development in the fourth quarter with an eye on delivering first oil in 2010. Tullow now estimates recoverable...

India.(COUNTRIES)
July 14, 2008... INDIA -- In contrast to the new private-sector players still keen to join the country's refining capacity boom, France's Total and its mainly state-owned partners are scaling back plans for a new east coast refinery--and may not proceed with...

Kazakhstan.(COUNTRIES)(Kazmunaigas acquired Mangistaumunaigas)(Brief article)
July 14, 2008... KAZAKHSTAN -- State-owned Kazmunaigas (KMG) has agreed to buy a controlling stake in oil producer Mangistaumunaigas (MMG), the last local independent oil company with significant assets. The deal ends a string of takeovers by state companies...

Russia.(COUNTRIES)(Brief article)
July 14, 2008... RUSSIA -- Spain's Repsol YPF is eyeing a stake in an exploration block off Sakhalin Island on the country's Pacific shelf in line with its strategic goal of shifting away from its traditional reliance on Latin America. Repsol is in talks with...

Russia.(COUNTRIES)(Brief article)
July 14, 2008... RUSSIA -- Crude exports via the Transneft pipeline network to destinations outside the former Soviet Union tumbled to 3.735 million b/d in June from 3.989 million b/d in May as the return of several refineries from turnaround helped spur a...

UAE.(COUNTRIES)
July 14, 2008... UAE -- Abu Dhabi National Oil Co. (Adnoc) has finally signed an interim agreement with ConocoPhillips for the $10 billion Shah field sour gas project, with a final agreement anticipated before the end of the year. The award of the Shah project...

Venezuela.(COUNTRIES)(Petroleos de Venezuela financial report)(Financial report)(Brief article)
July 14, 2008... VENEZUELA -- Contributions to government social programs by state Petroleos de Venezuela (PDV) ballooned to $2.68 billion in the first-quarter from $562 million for the same period in 2007, according to the company's first-quarter financial...

Nigerian gas plan spells trouble for LNG.
July 14, 2008... Nigerian President Umaru Yar'Adua is recommending a new gas policy framework that will require producers to supply more gas to the domestic market at locally affordable prices. Unless a workable compromise is found between government and the...

No discounts.(Marketview)
July 14, 2008... NEW YORK -- Gone are the days when Saudi Arabia would single-handedly determine the fate of the market and the oil price. In years past, the Saudis have held back output or flooded the market to give the oil price an extra push up or down....

Bush rejects Democrats' call for SPR release.
July 14, 2008... US President George W. Bush has rejected a call by Democrats to release oil from the Strategic Petroleum Reserve (SPR) in an effort to drive down runaway crude prices. However, the issue of using the strategic reserve as a way to control prices...

PIW market indicators.(Petroleum Intelligence Weekly)(Statistical table)
July 14, 2008... PIW Market Indicators ($/barrel) Jul. 7- Jun. 30- Jun. 9- Spot Crude Jul. 9 Jun. 4 Jun. 13 Opec Basket $135.60 $138.31 $129.74 UK Brent...

Iraq seeks to speed up oil field awards.
July 21, 2008... Less than two weeks after the launch of Iraq's first bid round since the US-led invasion of the country in 2003, the Iraqi cabinet has decided to establish a new body to accelerate the award of contracts for key strategic projects, including...

Aramco offers a peek into its reservoirs.
July 21, 2008... Keen to calm some of the anxiety in oil markets over its long-term output plans, Saudi Arabia has adopted a policy of relative openness on its reserves and production. Industry analysts have expressed doubts that the kingdom, Opec's sole swing...

China extends ambitions into oil-field services.
July 21, 2008... Depending on how it's viewed, the $2.5 billion takeover of Norwegian driller Awilco by China Oilfield Services Ltd. (COSL) is either a fairly typical deal for an overheated oil-field services sector or an eye-catching new take on the trend for...

Ghana find changes game in West Africa.
July 21, 2008... Escalating reserve estimates are confirming the Jubilee field offshore Ghana as the largest deepwater discovery in West Africa since Angola's "golden block" finds of the 1990s. Nearby exploration prospects could be Jubilee extensions or...

Compromise key to Lukoil's durability.
July 21, 2008... Lukoil, Russia's biggest private-sector oil company, has come through Moscow's state consolidation of energy assets largely unscathed after proving itself willing to make compromises. The price it has paid is control over its destiny: Lukoil's...

US motorists do little for Q2 earnings.(Financial report)
July 21, 2008... If there's any consolation for US motorists struggling to come to terms with $4 per gallon gasoline, it's that the price they're paying at the pump is doing little for Big Oil's bottom line. Second-quarter earnings from the leading majors are...

Corporate.(GENERAL)
July 21, 2008... CORPORATE -- Royal Dutch Shell's appetite for the unconventional shows no sign of abating, with the company last week paying $5.9 billion for Canadian tight gas producer Duvernay Oil in what is the biggest upstream deal of the year to date....

Pipelines.(GENERAL)
July 21, 2008... PIPELINES -- The reconfiguration of North America's oil transport network to deliver more synthetic Canadian crude to US refineries is continuing, with pipeline giant TransCanada and partner ConocoPhillips confirming plans to double the...

Algeria.(COUNTRIES)(Brief article)
July 21, 2008... ALGERIA -- Some six months after interested parties were asked to prequalify, the government has finally provided details of the 45 blocks to be offered in the country's first licensing round since 2004 (PIW Jul.7, p4). The blocks, half of...

Australia.(COUNTRIES)(Brief article)
July 21, 2008... AUSTRALIA -- Woodside Petroleum's plans to fast-track the expansion of its Pluto LNG project have run into problems after the independent came up with a dry hole from its Bellatrix-1 well. The well, in permit WA-370-P near Pluto, follows...

Australia.(COUNTRIES)
July 21, 2008... AUSTRALIA -- Canberra has proposed a cap-and-trade emissions program starting in 2010 in an effort to battle climate change. Dubbed the "Green Paper," the plan envisages the country's biggest-polluting firms, including global resource giant BHP...

Brazil.(COUNTRIES)(Brief article)
July 21, 2008... BRAZIL -- State-controlled Petrobras had to put in place a contingency plan to restore output after an oil workers' strike last week hit volumes from its key Campos Basin fields, which account for some 80% of the country's 1.9 million b/d oil...

Czech Republic.(COUNTRIES)(Brief article)
July 21, 2008... CZECH REPUBLIC -- Russia has dramatically cut crude deliveries to the central European country, sparking concerns that Moscow is once again using energy as a weapon, this time in response to Prague's support for the US' controversial missile...

Iran.(COUNTRIES)
July 21, 2008... IRAN -- Malaysia's state Petronas says it is still interested in operating in the country, despite recent moves by European majors to put Iranian oil and gas investment on hold amid growing concerns about Tehran's nuclear program. The state oil...

Libya.(COUNTRIES)(Brief article)
July 21, 2008... LIBYA -- State-owned National Oil Corp. (NOC) has finalized new extended Epsa-4 upstream contracts with Spain's Repsol YPF and tied up a $2 billion contract with the UAE's Star Consortium to upgrade and expand the 220,000 b/d Ras Lanuf refinery...

Malaysia.(COUNTRIES)(revenue report)(Financial report)(Brief article)
July 21, 2008... MALAYSIA -- State-owned Petronas saw its earnings for the fiscal year ending March 2008 reach record levels, with gains in domestic oil and gas output but a fall in total reserves. Domestic production totaled 1.67 million boe/d, up 4%...

Russia.(COUNTRIES)(Brief article)
July 21, 2008... RUSSIA -- Prime Minister Vladimir Putin has underlined the state's priorities of turning around the country's faltering oil production and utilizing more associated gas. And while pledging that the government would honor foreign partners'...

Russia.(COUNTRIES)
July 21, 2008... RUSSIA -- Independent producer Russneft has paid more than half of its 20 billion ruble ($858 million) tax bill for 2003-05 in a bid to avoid the same fate as bankrupt former oil major Yukos. But Russneft's bid to stay afloat may be...

United States.(COUNTRIES)(Brief article)
July 21, 2008... UNITED STATES -- President George W. Bush has lifted an 18-year presidential ban on oil and gas drilling off most of the US coast and urged lawmakers to respond to his initiative by lifting a separate congressional ban, calling for legislation...

Venezuela.(COUNTRIES)(Brief article)
July 21, 2008... VENEZUELA -- Keen as ever to play the populist regional statesman, President Hugo Chavez has offered the 17 Central American and Caribbean nations that belong to the Petrocaribe organization improved financing terms for purchasing oil from his...

Aramco Juggles Yanbu, Jubail project needs.
July 21, 2008... Saudi Aramco is forging ahead with two giant new refineries at Jubail and Yanbu almost simultaneously, confounding expectations that it would stagger work to prevent an overlap in demand for skilled labor and materials in an already overheated...

Minor meltdown.(Marketview)
July 21, 2008... WASHINGTON -- Up is not the only direction for the crude oil market. US crude futures took a couple of beatings last week, falling more than $10 in two days before stabilizing at the $134/bbl level as PIW went to press, putting US benchmark...

US Group seeks tougher controls on blending.
July 21, 2008... US industry players are stepping up efforts to push for stricter controls on oil blending, concerned that mixes of different quality crude are damaging sensitive refinery equipment and lowering the quality of refined products. The Crude...

PIW market indicators.(Petroleum Intelligence Weekly)(Statistical table)
July 21, 2008... PIW Market Indicators ($/barrel) Jul. 14- Jul. 7- Jun. 16- Spot Crude Jul. 16 Jul. 11 Jun. 20 Opec Basket $136.97 $136.07 $129.04 UK Brent...

Controversy, confusion over Iraq bid round.
July 28, 2008... Iraqi Oil Minister Hussein al-Shahristani is under pressure domestically to boost his country's oil output, which years of postwar stagnation have left below 2.5 million barrels per day. His controversial response has been to launch Iraq's...

Exotic options behind much recent volatility.
July 28, 2008... At times in recent weeks, oil prices have been both falling and--less often--climbing at a rate of a dollar per minute. This dramatic volatility is not due to any sharp shift in fundamentals, but to sudden fresh bursts of speculative trading,...

Gazprom, Rosneft find ways to cooperate.
July 28, 2008... With the recent forging of significant deals tying Rosneft and Gazprom together in the Russian Far East, the country's dueling oil and gas champions have begun to play nice, a modest six months after the government ordered them to cooperate...

Oil sands surge prompts US pipeline rethink.
July 28, 2008... More and more, US refiners are looking north to Canada for their crude, a trend that is prompting a large-scale reconfiguration of North America's oil transportation network, involving reversals, expansions and extensions. With the geography of...

Big Oil still struggling to get retail right.
July 28, 2008... Big Oil started selling transport fuel directly to motorists just over 100 years ago. With a century of experience and brand-building--and with a direct line to supplies of the main product they sell--the majors should dominate auto fuel...

US slowdown diverts jet to Europe.
July 28, 2008... The cooling of the US' passion for gasoline is having a huge knock-on effect on other products. With US gasoline cracks in negative territory at the height of the summer driving season, refiners are favoring middle distillates. This is lifting...

Majors eye North America's new gas plays.
July 28, 2008... If recent deals by Royal Dutch Shell and BP are any indication, North America's unconventional gas plays may not be dominated by the independent sector for much longer. Up until now, independents, including Devon, Chesapeake, XTO, Southwestern...

Iraq's al-Shahristani steps up the pace.(Energy Intelligence Mideast Bureau)(Ruba Husari)(Interview)
July 28, 2008... Iraq is trying to shed its postwar reputation as a high-risk place to do business, launching the first open and public licensing rounds in the country's history to attract international oil companies to develop its huge reserves. But delivering...

Arctic.(GENERAL)
July 28, 2008... ARCTIC -- The Arctic holds more than one-fifth of the world's undiscovered, recoverable oil and natural gas resources, according to a new US Geological Survey review. The report found that the area north of the Arctic Circle holds an estimated...

Refining.(GENERAL)
July 28, 2008... REFINING -- The expansion of global downstream capacity, combined with sustained high crude prices, is ushering in a dark age for the international refining industry, according to a new report from investment bank Credit Suisse. The US refining...

Algeria.(COUNTRIES)
July 28, 2008... ALGERIA -- State-owned Sonatrach has decided not to retain the UK's Petrofac and Indonesia's IKPT to build the 4.3 million ton/yr Gassi Touil LNG plant at Arzew and will instead open talks with the second-lowest bidders, a partnership between...

China.(COUNTRIES)(Brief article)
July 28, 2008... CHINA -- The country's appetite for crude continues to grow, with imports leaping 10.5% in the first half of 2008 to average 3.65 million b/d, according to customs data. Angola was the top supplier, followed by Saudi Arabia. Venezuela nearly...

Colombia.(COUNTRIES)
July 28, 2008... COLOMBIA -- Government proposals for increasing windfall oil taxes on producers failed to deter bidders in the country's heavy crude round, which saw interest in all eight blocks on offer in the Llanos Basin, near neighboring Venezuela's own...